The Chancellor has launched the UK Secondary Capital Raising Review which will allow public companies listed in the UK to raise capital for investm
The Chancellor has launched the UK Secondary Capital Raising Review which will allow public companies listed in the UK to raise capital for investment more easily. The review will examine ways listed companies can raise the necessary capital through secondary transactions.
A UK Government source said Mr Sunak’s review aims to “seize a competitive advantage” now the UK has left the EU and “provide open, dynamic capital markets for existing and innovative companies.”
They added: “We wanted strong ideas which can make the City of London and UK one of the best places in the world to do business.
“We’re determined to enhance the UK’s reputation now we’ve left the EU and show how bold Brexit Britain can be.”
Secondary capital raising is a quick method to inject cash into a company for investment and involves selling new shares of a listed company after it has already gone public or through private placings with a small group of investors or institutions.
The review will look at how technology could ensure shareholders get information faster and reduce the period during which they exercise their rights to improve the efficiency of these secondary capital raising activities.
Mr Sunak said: “Our plans to boost UK markets go beyond attracting the world’s most successful companies to list here.
“We want to make sure companies who already tap our world-leading capital markets can raise finance efficiently and include their current shareholders in the process.”
Treasury figures reveal UK markets raised £30billion in new equity last year as companies sought to shore up their finances during the COVID-19 pandemic.
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However, most businesses chose to raise funds through faster private placings with a small group of institutions, rather than using the stock market.
The review will be led by Mark Austin, a Freshfields lawyer and chair of the Financial Conduct Authority’s Listing Authority Advisory Panel.
Mr Austin said the efficiency of secondary capital raisings by listed companies was “an important element of making the UK an even more attractive place for businesses to list.”
The UK recently completed a review of the primary listings market and regulators are expected to finalise rules making it easier for companies to float and help London compete better in tech listings with New York.
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The review comes as part of a wider post-Brexit strategy by ministers to make the City of London a more attractive global hub.
The Primary Listings Review by former European Finacial Services Commissioner Lord Jonathan Hill published earlier this year recommended the secondary capital market could be improved by re-establishing the 2008 Rights Issue Review group.
That group of Bank of England, regulators and industry representatives had recommended investigating more accelerated rights issue models, including those used in Australia, but the suggestion was never taken forward.